BANK OF NEW ZEALAND

Hokitika Guardian, 15 June 1928, Page 4

BANK OF NEW ZEALAND

ANNUAL MEETING. WELLINGTON, June 15. The annual meeting of Shareholders of the Hank of New Zealand was held to-day, Sir George Elliott (Chairman) presiding. The Chairman said, before formally moving the adoption of the report and balance-sheet, I take the opportunity of drawing attention to any material differences in the various accounts.this year as compared with those of last year, and will explain how those differences are brought about. CAPITAL, RESERVE FUND, AND UNDIVIDED PROFITS. The paid-up capital of tho Rank now stands at £6,241,210. The difference between this amount and that shown on last year’s balance sheet, viz. £242,012, is explained by the payments made by shareholders on account ol “Long-Term Mortgage Shares.” In addition to this Capital there is the Guaranteed Stock of £529,988. The stock will mature in 193-1, and it is the present intention of the Directors to pay it olf at its maturity. PROFIT AND LOSS ACCOUNT. Hie profits for tho year have been swollen by £73,510 surplus on realisation, or on maturity, of Government and other investment Stocks. The actual net earnings from the ordinary business and the Long-Term Mortgage department arc £5,793 less than the previous year, notwithstanding the fact that the Bank has had the use of an extra average amount of £403,235 new Long-Term Capital. This falling-off of profits is duo to a reduction in advances, to increased payments of interest on deposits, and to increased operating expenses. A diminution of ordinary earnings was anticipated, and shareholders have been warned from this Chair, on more than one occasion, that in the future it would he difficult to maintain Bank profits at a level equal to that of the past few years.

I Banking is just as sensitive to dull times as any trade or profession, although a casual examination of balancesheets might not hear out this contention. I would remind you,' however, that a Rank takes advantage of times when trade is prosperous and profits are large to make provision for losses which are inevitable when the pendulum swings the other way. Taking into consideration the heavy losses sustained by the Rank of New Zealand since 1920, occasioned by circumstances beyond the control of the Directors, it is safe to say the balancesheet presented to you to-day would not have been such pleasant reading had ample provision not been made in the past for contingencies that might arise. It has again been considered advisable to make considerable provision for doubtful advances, hut it is hoped that a fair proportion of the provision so made will ultimately not he required. DEPOSITS. There has been an incTea.se in interest-bearing deposits of £1,279,604 Whilst non-interest hearing deposits decreased 604,595 The net increase for the year being £675,009 BOARD OF DIRECTORS. The two Directors appointed by the Government due to retire in March last were Mr William Reece anil myself, both of whom the Government has seen fit to reappoint. Mr R, W. Gibbs’ term of office as a Shareholders’ Director also expired in March last. Mr Gibbs gave the Board the requisite notice; he was the only candidate for the vacancy, and I have much pleasure in stating that he has been duly re-elected. STAFF. On behalf of the Board of Directors I have pleasure in recording* appreciation of the services accorded to the Bank during the past year by its staff. These services have been recognised in a tangible manner by the payment of a bonus on the same scale as that oflast year. . , . , v DIVIDEND AND BONUS.

The Dividend and Bonus, payable in Wellington to-morrow and at the various branches on receipt of advices, will be at the same rates as those of last year.

RATE OF INTEREST ON ADVANCES Banks were"' much criticised when the minimum rate of interest on advances was increased in May of last year—an action rendered nepessary by the position into which the Banks were getting. It, is true that the advances of all the Banks of New Zealand had increased considerablyit is also true that the imports for the years ended 31st March, 1926 and 1927, were much in excess of exports; but neither of these factors, important as they are from a Banker’s point of view, was the chief reason why the overdraft rate was raised. The determining cause "was the intense competition. Governmental and private, for deposits. During the past few months there lias been much agitation for a reduction of the Bank advances rates, and, in .view of the figures I have quoted, there would appear to he some justification for this agitation. I would point out, however, that to lower rates before the position stabilised might eventually be more upsetting than. to . keep them for aJitUc longer a t. .tiiri .level .i-uliiijt- fit present: .. .Is, as a result of sucH lowering, the demand

for advances, increased unduly, or deposits were reduced, the same position as existed a year ago would quickly develop, and the same remedy would again require to be applied. Rapid fluctuations in Bank rates is not a desirable state of affairs for any country, and it is to avoid such a contingency that tno present rates are being maintained somewhat longer than soms people think necessary. May 1 emphasise the fact that high rates of interest are not of advantage to the Banks: borrowing customers may rest assured that their Bank Directors will be just as pleased as they themselves when the position warrants a reduction. LONG-TERM MORTGAGE DEPARTMENT. The amount so far lent on LongTerm Mortgage is not as large as was anticipated, but the operations of the Department are steadily growing. The amount current on 21st ulto. was £330,461, and further commitments to lend nearly £IOO,OOO have been entered into. Many applications have been declined, the security offered either not affording the requisite margin or being of an unsatisfactory nature. The Bank is in a position to lend a large amount under the scheme, and it wel comes suitable applications; but shareholders may rest assured that there is not the slightest intention of taking up risky business. Borrowers who want a low rate of interest must give first-class security. RURAL INTERMEDIATE CREDIT. Last session Parliament passed a measure empowering the establishment of a Rural Intermediate Credit Board for the purpose of, making loans t'i farmers on tho security of farm produce and live-stock. The measure is a well-meaning attempt to meet a difficult position, viz: the financial necessities of farmers who have not sufficient satisfactory security to enable them to borrow through the ordinary channels, Tho Government is lending tho Board £400,000 free of interest for 10 years, and it is also extending other cash privileges.

The success of the scheme will depend largely on the terms oil which tho Board can raise its Bond issues. The Bonds will he a first charge upon tbe moneys from time to time lent by tbe Government to the Board as mentioned, and tbe assets upon which loans are made. These will comprise tbe only securities available to Bondholders.

Any scheme tliat will help the farming industry is most worthy of sup-

port: it is, therefore, to he hoped that the public, and particularly farmers who are in a position to do si), will assist the movement by taking up these bonds as they are issued.

It has been reported, however, that the Board’s intention is to lend its funds only upon such securities as the ordinary prudent business man would accept; hut-if this intention lias been correctly reported and is carried out in practice, it will he found that loans will he granted only to persons and associations who could quite easily obtain assistance elsewhere at little above the charge made hv the Intermediate Credit Board. A difference of even one per cent would not be sufficient- to pay the income tax, apart altogether from other rates or taxes that private lenders are subject to. My colleagues and I are strongly of opinion that it would bo in the best interests of tlie'Doininioii if the Board altered such intention, took wider risks, and charged a higher rate of interest on account of those risks. Borrowers whose security is not of high order have the greatest difficulty in raising riioriey at any price, and these are the people that stand most in need of assistance at tlie present* time. Whether, the rate of interest charged is 6 of 8 per cent is not of vital importance—what is of importance is that these borrowers should bo assisted to the greatest extent possible and given a chance to win through, even though their security may not be of a choice nature, provided, of course, their character and ability are satisfactory.

If there is any necessity for a Governmental Rural ,Intermediate . Credit Department, and I think there is, tint necessity lies in the direction of help for the struggling settler. Such help can he given only by Government, and not by the Stock arid Station Agents, Financial Corporations and private lenders who, having to pay high rates and taxes, cannot afford to take the risk involved in this class of business without charging a very high rate of interest. -■

In connection with the Rural Intermediate Credit Boards, Advisory Committees, have been appointed in various districts, the members of which slioul 1 be, doubtless invariably are, in a position to judge as to the honesty of purpose, ability, and general, character of the applicants for loans. Taking these essentials into consideration, they might, with a reasonable degree of safety, advise tlie Board to make an 'advance-' even though the margin of material security was not up to the level demanded by tlie private lender. The percentage of josses in this class of business would be certain to be above tlie averrige; but if a rate of interest were charged sufficient to cover file.extra risk involved, it is conceivable that a. great and valuable work woiild be accomplished not only for many .a struggling settler, but for New Zealand generally. . _ BUTTER, AJ?D CHEESEv._. The total Butter arid cheese import-

ed into Great Britain for the year ended 31st March last amounted to 6,165,796 and 2,988,167 cwts. respectively. Of this amount,. New Zealand supplied 1,459,060 cwts. of butter and 1,698,068 cwts. of cheese.

At our annual meeting two years ago, 1 gave it as, my opinion that il the .Meat Control Board and the Dairy Control Board were amalgamated, and the total personnel reduced considerably, not only would there be a great reduction in the cost oi administration, but the.work would be done more efficiently. This opinion was strengthened and confirmed during my visit t> London last year. I again take occasion to point out that both Boards are doing precisely the same work with two 'sets of officials, two stall's, and two offices at both ends. THE OUTLOOK. The period under review lias not been free from difficulties. In business, particularly wholesale business, it has too often been found impossible to.earn an adequate return on capital. The times arc in flux, conditions are changing, competition has proved too keen for some; unemployment has been rife, but there are undoubted signs of better things to come. In view of tbe fact, as I have already indicated, that we in New Zealand depend Tor our material prosperity on our export trade in primary products; taking into consideration the prices those primary products are now fetching on tiio world’s market, and seem likely to continue fetching; and with, flic knowledge of tho exceedingly satisfactory trade balance disclosed by the recent Governmental figures for the year ended March last, may I. assei t lPat he must be a pessimist indeed who feels it necessary to take a gloomy view of tho present position of the country ?

1 have now pleasure in proposing the adoption of the report and balameslicet.

Mr "William Watson, seconding the motion, congratulated all Sliai elioldei s on the very sound position of the Bank.

CiSTINOf <ONS CONFERRED. On Sander and Sons’ Purs Volatile Eucalyptie Extract include first Awarr and Gold Medal, N.Z. and S.B. Exhibition, 1926, -Dunedin, w %.; Award anc Aledal, International Exhibition, Am sterdam ; its purity and potency ii proved by analysis of Prof. Ingliß University of Otago, and De Bavay .Melbourne; it was proved best »t th Supremo Jourt, Melbourne; it i 3 re commended by eminent medical authorities and enjoys Royal patronage Why? Because Sander’s Extract ii not the commercial eucalyptus oil, but d specially prepared medical product hig.ay effective in all infectious diseases, cuts, burns, sores, piles, etc., when used as directed. Insist on thi Cenuiri9 Sant’ar'f . ft is the beat